A budget is essentially tracking how much you are making and spending. Though it might sound easy, coming up with a budget plan and sticking it can be a little tricky to figure out alone. These tips should help you start to save so that you can start putting money towards your dream first home.
1. Track your spending
Make a note of everything you buy so that you can identify your spending patterns. You can do this by keeping receipts, downloading your bank’s app so you can regularly and easily check your account and make a note of where you are spending money. There are also lots of other great apps available that are perfect for this process.
2. Decide a time frame
Are you looking to do a weekly, fortnightly or monthly budget? It mainly depends when you are paid and what you are hoping to achieve. Also it can be a personal preference as some people prefer the idea of smaller weekly amounts consistently etching their savings up, while others prefer to see nice big savings jumps each month.
3. How much are you paid?
It’s important to know how much you have coming in so you can figure out how much you can take out or spend. Calculate your pay by finding out your salary and how much will be going towards your super, taxes and student loans. You can then have an automatic amount that goes into your savings account every time you are paid.
4. Put everything into categories
If you are looking to take you spending tracking to the next level, then categorising your habits is the next logical step. Again there are some great apps to help with this.
Suggested categories include:
–home and utilities for your rent or board
–bills for your car insurance, student loans and phone bill
–transport for fuel and money on your smartrider
–groceries for your food shopping
–personal for your toiletries, clothing medication etc
–entertainment for bought lunches, movie and concert tickets, drinks and alcohol etc
5. Be realistic
Noone is saying you must become an elusive hermit if you have any hope of owning your own house. It would be impractical to say you weren’t going to spoil yourself occasionally. Like a diet, if you cut out all the good stuff at once you are unlikely to keep at it. The best thing you can do with your finances is find a balance.
Have you heard of the 50/30/20 rule? Spend 50% on the essential categories, 20% on savings and put 30% towards entertainment. You could break the 30% for your savings up so that 10% goes to an emergency fund and 10% goes towards your future goals.
7. Figure out which costs you can cut
Once you have identified and categorised your expenses examine which ones could be significantly reduced or even cut. Are you paying for an uber for a distance you could easily walk? Maybe you are splurging on dining out when you could prepare your own meals. Evaluate how important each of your regular purchases are.